06.28.2022

Market Insights – 6/28/2022

Wholesale Prices, Week Ending June 24th

Overall, the Canadian used wholesale market saw prices decline for the week (-0.22%). The Car segment continues to outperform the SUV/Truck segment, as consumers opt for smaller, more fuel-efficient vehicles, due to fuel prices remaining high across Canada. The Car segment saw prices decline (-0.20%), while the Truck/SUV segment saw prices decline by -0.24%, for the week. 6 of the 22 segments saw prices increase for the week, with Compact Van leading the way (+0.27%).

Car Segments

• Used cars had an overall decrease with a weekly change of -0.2%.
• A majority of the weekly price decreases were driven by the Mid-Size Car and Sporty Car segments which were down -0.46% and -0.45% from the prior week.
• Sub-Compact Car (+0.23%), Full-Size Car (+0.05%), and Luxury Car (+0.03%) segments saw increases from the prior week.
• More than half of the car segment showed decreases vs prior week.

Truck Segments

• Overall, Truck segment weekly values decreased -0.24%
• The continued decline in price was attributed to increasing sales rate for SUVs, with Full-Size Vans seeing the biggest drop (-0.58%), followed by Full-Size Luxury Crossover/SUVs (-0.42%), and Full-Size Crossover/SUVs (-0.35%).
• Compact Van and Sub-Compact Crossover segments led the Truck/SUV segments with increases of +0.27% & +0.08%, respectfully.

Used Retail Prices & Listing Volumes

The average listing price for used vehicles decreased slightly week over week, as the 14-day moving average is now just below $37,000. Analysis is based on approximately 120,000 vehicles listed for sale on Canadian dealer lots.

Wholesale

The Canadian wholesale market decreased further this week. The decrees seen this week were slightly more than the previous week, mostly due to a large drop in the Car segments. Supply remains low with extremely high demand on both sides of the boarder. Upstream channels continue to tap supply before it can be available to wholesale markets.

Conversion rates decreased this week. Some observed sell rates were as high as 60% this week. We are seeing more sellers setting floors lower which has been contributing to increasing sell rates.

The U.S. market exchange rate remains favourable for exportation when price and demand are taken into consideration. Arbitrage opportunities have continued to bring US buyers, causing a steady flow of vehicles south across the border.

Canadian Black Book’s Market Insights

Economics & Government

• Canada’s 10-year government bond yield climbed above 3.62%, consolidating the rebound of the previous session, as inflation risks recovered ground amid higher commodity prices and China’s gradual reopening pushed back recession woes.
• With Statistics Canada reporting that the annual rate of inflation soared to 7.7 per cent in May, the central bank will be pressured to act swiftly and show Canadians that it will take the necessary steps needed to stifle inflation. All signs point to a 0.75% increase to the interest rates.
• Canadian Dollar Is Mostly Flat Against U.S. Dollar sitting at $0.78 as of Monday.

U.S. Market

In the U.S., overall, Car and Truck segments (-0.02%) decreased for the first time in nine weeks; the prior week increased by +0.10%.
Volume-weighted Car segments increased +0.16%, compared to the prior week’s increase of +0.21%:

• Five of the nine Car segments increased last week.
• Compact Cars continue to be the strongest performing Car segment, with the segment increasing another +0.62% last week. This now marks fourteen weeks of consecutive increases.
• The Sub-Compact (+0.09%) and Mid-Size (+0.04) are also still reporting gains, but the rate of gain is slowing.
• The only luxury Car segment to report an increase last week, was the more affordable, Near Luxury segment, with a gain of +0.10%.

Volume-weighted Truck segments decreased by -0.11%; the previous week had an increase of +0.04%:

• Nine out of the thirteen Truck segments reported decreases.
• After twelve weeks of increases, the Compact Crossover segment reversed course and declined -0.15%.
• Full-Size Pickups only had six weeks of increases but have also resumed declines with a depreciation of -0.09% last week.
• Compact (+0.33%) and Full-Size (+0.06%) Van segments continue to see strength as a result of inventory shortages.
• Full-Size (-0.34%) and Full-Size Luxury (-0.36%) Crossover/SUV segments reported the largest declines last week.

Industry News

• General Motors launched a hassle-free plug-and-charge service that automatically charges without a mobile app to pay. The feature will be available this week, at EVgo DC fast charging stations in the Ultium 360 network, for drivers with an EVgo account, active OnStar connected services, and the GM brand app for their vehicle.
• Nissan has partnered with artificial intelligence (AI) company, Acerta Analytics Solutions Inc., to develop machine learning models to predict maintenance issues.
• The federal government plans to enact a new luxury tax on vehicles that cost more than $100,000; the luxury tax is expected to add $572M to government coffers through the 2026-27 budget year but reduce sales by $566M, or 19%, over the same time span.
• Vietnam-based electric-vehicle maker, VinFast, is offering free EV charging across Canada or at-home chargers to new buyers as part of their Charged Up program.